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CEKA
Wilmar Cahaya, still extremely cheap
🎯🍩📈➡️ Rp5,913
12 month free cashflow +Rp272bn ⬇️
August 4th, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch the 3 minute explainer using data file & model ⬇️
Sales
After a positive 1Q, CEKA 2Q sales were disappointing & back down to the lowest level of the last 5 years Rp724bn. That is -6% growth from a year ago & 12% below our forecast. But we stick with our earlier forecast that sales are in the process of turning around & predict +5.1% growth next 12 months to Rp3.4tn.
Cashflow
The lower sales, had a big effect on free cashflow which turned negative in 2Q again (excluding working capital) & operating cashflow was negative for the first time since 2017. Average quarterly free cashflow in the last 12 months is at Rp68bn & despite our sales growth forecast this will drop to Rp47bn a quarter in the next 12 months.
After a positive 1Q, CEKA 2Q sales were disappointing & back down to the lowest level of the last 5 years Rp724bn. That is -6% growth from a year ago & 12% below our forecast. But we stick with our earlier forecast that sales are in the process of turning around & predict +5.1% growth next 12 months to Rp3.4tn.
Cashflow
The lower sales, had a big effect on free cashflow which turned negative in 2Q again (excluding working capital) & operating cashflow was negative for the first time since 2017. Average quarterly free cashflow in the last 12 months is at Rp68bn & despite our sales growth forecast this will drop to Rp47bn a quarter in the next 12 months.
Still forecasting sales recovery, strong cashflow, bigger dividends, shares 5x...
Balance sheet
Despite the negative cashflow in the 2Q, the net cash position remains strong at Rp513bn. CEKA has been net cash since the end of 2018 & has been paying out a dividend since 2017. With our forecast for Rp188bn of cashflow in the next 12 months, net cash will rise even further to Rp593bn including a higher Rp108bn dividend payment.
Profit
Net profit also saw a large decline to only Rp1bn in the 2Q from Rp33bn a year ago & Rp66bn in the 1Q. The cash cost ratio, net profit add depreciation minus sales as a % of sales is at 94% in the last 12 months. We use 94% again to forecast a flat next 12 months net profit, Rp192bn.
Value
CEKA current market value is at Rp1.01tn. That’s just 0.3x our sales forecast, 0.7x the value of the assets & 0.79x the equity with a profitability of 15%. Yield is forecast to be 11%. We use our 1.6% cashflow valuation with a huge 70% discount because otherwise the value would be too high. This gives a higher target price Rp5,913.
Despite the negative cashflow in the 2Q, the net cash position remains strong at Rp513bn. CEKA has been net cash since the end of 2018 & has been paying out a dividend since 2017. With our forecast for Rp188bn of cashflow in the next 12 months, net cash will rise even further to Rp593bn including a higher Rp108bn dividend payment.
Profit
Net profit also saw a large decline to only Rp1bn in the 2Q from Rp33bn a year ago & Rp66bn in the 1Q. The cash cost ratio, net profit add depreciation minus sales as a % of sales is at 94% in the last 12 months. We use 94% again to forecast a flat next 12 months net profit, Rp192bn.
Value
CEKA current market value is at Rp1.01tn. That’s just 0.3x our sales forecast, 0.7x the value of the assets & 0.79x the equity with a profitability of 15%. Yield is forecast to be 11%. We use our 1.6% cashflow valuation with a huge 70% discount because otherwise the value would be too high. This gives a higher target price Rp5,913.
